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This was not to be yet another budget speech. It came in the wake of a regime change where the electorate signaled its unhappiness with the direction of the country, the manner in which it was being led, and with the deep morass in which the majority of the people found themselves stranded despite unprecedented economic growth.
The promise of Mr Narendra Modi that achche din aane wale hain was not just about our immediate well being but also the promise of a new vision. The people of India, particularly the youth and more specifically the first time voter, reacted enthusiastically to this promise and responded by brutally casting out the Congress regime and its way of doing things and rejecting the notion of a Rahul Gandhi government. It literally threw out the baby with the bathwater.
India's predicament stated in a few sentences is just this. We need to be creating 12 million jobs each year for the new entrants to the workforce. We have not been doing so for quite sometime now. The UPA's growth was mostly a jobless growth. Regional disparities were growing, so were income inequalities. The fact that while agriculture contributes to a mere 18% of the GDP, almost 60% are still dependent on it, very simply tells us that the majority gets less and less. Modi's promise was that all this would be attended to.
The BJP election manifesto unrolled a very clearly articulated vision. Infrastructure was to drive our breakout growth. A hundred new cities, a brand new high-speed railway network, the interlinking of rivers, non-stop power supply to every home in India, and a home for every Indian family before 2020 were some of its more exciting promises. In short, they created the expectations of a new prosperous, equitable and modernised India.
Instead of a new roadmap towards this vision, we got another business as usual budget. As budgets go, it is a competent and even good budget. It does its job quite well. It doesn't promise much and does rock the boat either. On the other hand, we have a few lollies to keep our mouths sweet and immediate appetites whetted. The deductions for house loan interest and investments have been increased. A taxpayer could benefit by as much as Rs.7-8000 a year on this. The IT limits for ordinary taxpayers and senior citizens have been raised by Rs.50, 000 each. A taxpayer could benefit by up to Rs.15000 pa. This is good news indeed. The expected sharp cut in subsidies neither did nor materialise. Households all over will heave a sigh of relief that the subsidy on LPG will continue to be over Rs.450 per cylinder. We all, the readers and this writer, benefit by this and can't be complaining. We should indeed be happy.
There are some provisions for the farm sector that should also appeal. Nabard will now be required to extend credit to half a million landless farmers, hitherto unable to get credit due to lack of any land as collateral. Agricultural credit exposure is to be expanded to Rs. 8 lakhs crores and a 4% rebate on the timely repayment of farm loans attracting an already concessional 7% will be welcome and incentivise repayment. The budget also provides a fund of Rs.5000 crores for building new farm logistics such as cold storages and grain silos.
There are other good ideas as well. New power projects will get a ten-year tax holiday. There will be no recourse to retrospective taxation. This will make the FII lobby very happy. There are increases in FDI limits for critical sectors like infrastructure, housing, insurance and defence. More FDI will be brought into the automatic route. MNREGA is to be linked to specific projects and purposes. Over Rs.52, 000 crores is to be invested in roads and highways, including Rs.14, 389 crores for rural roads. There is also a special venture capital fund of Rs.10, 000 crores. These are all welcome.
To pay for all this, in addition to all that is already in the pipeline, the government hopes to increase Revenue by 19.2%, while the GDP growth is expected to between 5.4-5.9%. What does this suggest? Will we have a higher inflation? Or is tax collection going to get better by that much? One clear indication is the FM's announcement of a Settlement Commission to realise a good part of the Rs.8.1 lakh crores now stuck in litigation and disputes. But there is no comment on how the government plans to recover the Rs.4.64 crores of State-owned banks, now stuck up as NPAs? One can only wish them well.
This budget comes against the backdrop of two looming crises. The entire rain-fed region in India, over 60% of the cropped area, is now stricken by inadequate rainfall or drought. We will need to provide for this. But the FM clearly hopes on the weather goods coming good. The war in Iraq threatens to jack up oil prices. The oil trade deficit now is about $110 billion. If prices go up, the burgeoning domestic demand will further stress the current account deficit. Maybe, the FM is hoping on diplomacy and good sense to prevail in the Middle East?
The problem with this budget is that it could be another Chidambaram budget as well. Only Chidambaram would have written a shorter speech and have been more eloquent. Interestingly enough, Chidambaram's interim budget for 2014-15 indicated total revenue of Rs. 17.63 lakh crores, while Jaitely's budget hopes for revenue of Rs.17.94 lakhs. It would seem that for just another Rs.31000 crores, Arun Jaitely went on and on for two hours and ten minutes. Not only people like me sitting in distant TV studios, even his cabinet colleagues possibly found it tedious and taxing. Ministers Ashok Gajapathi Raju was seen yawning and Piyush Goyal was catnapping.
Given this modest budget, I have little doubt that Arun Jaitely will competently manage it. It is within limits. It is even modest. It is some more of the same. But that is not the promise of the Modi government. The good days promised look far away.
By Special Arrangement with : Observer Research Foundation (www.orfonline.org)